The Aaron’s Company Reports First Quarter Revenues and Earnings

The Aaron’s Company, Inc., a leading technology-enabled omnichannel provider of lease-to-own and purchase solutions, today announced financial results for the first quarter ended March 31, 2021.

Financial Highlights

–First Quarter Revenues of $481.1 Million, Up 11.1%

–Diluted EPS of $1.04, Up From ($9.57); Non-GAAP Diluted EPS $1.24, Up 313.3%

–Net Income of $36.3 Million, Up From ($323.8) Million

–Adjusted EBITDA of $73.9 Million, Up 112.9%

–Same Store Revenues Up 14.8%; E-commerce Lease Revenues Up 42.0%

“We are very pleased to announce a strong start to 2021,” said Douglas Lindsay, Chief Executive Officer of The Aaron’s Company. “Customer deliveries and payment activity in the quarter were robust, and the size of our lease portfolio continues to grow compared to the prior year period.  Our operations teams are energized and are executing at a high level, and our key strategic priorities continue gaining momentum. We are making investments in industry-leading technology, analytics-driven marketing programs, and our rapidly growing e-commerce channel. As a result of these investments, we believe Aaron’s is well-positioned to continue delivering long-term earnings growth and strong free cash flow.”

Results of Operations – First Quarter 2021

For the first quarter of 2021, consolidated revenues were $481.1 million compared with $432.8 million for the first quarter of 2020, an increase of 11.1%. The increase in consolidated revenues was primarily due to the improving quality and size of our lease portfolio and strong  customer payment activity during the quarter, partially offset by the planned net reduction of 78 company-operated stores compared to the prior year period. E-commerce revenues were up 42% compared to the prior year quarter and represented 14.2% of overall lease revenues compared to 11.3% in the prior year quarter.

On a same store revenue basis, revenues increased 14.8% in the first quarter compared to the prior year quarter, the first double-digit same store revenue growth since 2009, and the fourth consecutive positive quarter in a row. Same store revenue growth was primarily driven by a larger same store lease portfolio size and strong customer payment activity, including retail sales and early purchase option exercises, which we believe are partially as a result of the government stimulus programs.

Net earnings for the first quarter of 2021 were $36.3 million compared to net losses of $323.8 million in the prior year period. Net earnings in the first quarter of 2021 included $3.4 million in pre-tax restructuring charges and $4.4 million in pre-tax spin-related separation charges. Net losses in the first quarter of 2020 included a $446.9 million goodwill impairment charge, $22.3 million in pre-tax restructuring charges, and $14.7 million in early termination charges incurred to terminate a sales and marketing agreement, partially offset by a $34.2 million net income tax benefit resulting from the revaluation of a net operating loss carryback.

Adjusted EBITDA for the Company was $73.9 million for the first quarter of 2021, compared with $34.7 million for the same period in 2020, an increase of $39.2 million, or 112.9%. As a percentage of revenues, Adjusted EBITDA was 15.4% in the first quarter of 2021 compared with 8.0% for the same period in 2020, an improvement of 740 basis points. The improvement in adjusted EBITDA margin was primarily due to the items described above related to the revenue increase, a reduction in lease merchandise write-offs, and the impact of the COVID-related reserves recorded in 2020 that did not repeat in 2021, partially offset by higher personnel costs related to variable performance compensation.

Diluted earnings per share for the first quarter of 2021 were $1.04 compared with diluted losses per share of $9.57 in the year ago same period. On a non-GAAP basis, diluted earnings per share were $1.24 in the first quarter of 2021 compared with non-GAAP diluted earnings per share of $0.30 for the same quarter in 2020, an increase of $0.94 or 313.3%.

During the quarter, the Company repurchased 252,200 shares of Aaron’s common stock for a total purchase price, including brokerage commissions, of approximately $6.3 million. Also during the quarter, the Company’s board of directors declared a quarterly cash dividend of $0.10 per share which was paid on April 6, 2021.

As of March 31, 2021, the company had a cash balance of $61.1 million, less than $0.5 million of debt, and total available liquidity of $295.5 million.

Franchise Performance

Franchisee revenues totaled $88.9 million for the first quarter of 2021, a decrease of 13.4% from the first quarter of 2020 primarily due to a reduction in franchise locations. Same-store revenues for franchised stores increased 13.1% for the first quarter of 2021 compared with the same quarter in 2020. Revenues and customers of franchisees are not revenues and customers of the Company.

2021 Outlook

Based on the recent passage of the American Rescue Plan Act and our performance in the first quarter of 2021, the Company has revised its full year 2021 outlook. For the full year 2021, we expect consolidated revenues between $1.725 billion and $1.775 billion, representing an increase in our outlook of $75 million. We also expect adjusted EBITDA of between $190 million and $205 million, representing an increase in our outlook of $35 million. First half 2021 revenues and adjusted EBITDA are expected to be higher than the second half of 2021 primarily due to the uncertainty related to future consumer payment and spending patterns in the latter part of the year.

For the full year 2021 updated outlook, we have assumed an effective tax rate for 2021 of approximately 25%, depreciation and amortization of between $70 million and $75 million, and a diluted weighted average share count of approximately 35 million shares. This outlook assumes no significant deterioration in the current retail environment or in the state of the U.S. economy as compared to its current condition, a gradual improvement in global supply chain conditions, and no impact of the child tax credit program expected to begin in July 2021.

Basis of Presentation

The financial statements and related results discussed herein for periods prior to and through the date of the separation and distribution, November 30, 2020, were prepared on a combined standalone basis and were derived from the consolidated financial statements and accounting records of PROG Holdings, Inc. The financial statements for the periods subsequent to December 1, 2020 and through March 31, 2021 are consolidated financial statements of the Company and its subsidiaries, each of which is wholly-owned, and is based on the financial position and results of operations of the Company as a standalone company.

The combined financial statements prepared through November 30, 2020 include all revenues and costs directly attributable to the Company and an allocation of expenses from PROG Holdings, Inc. related to certain corporate functions and actions. These costs include executive management, finance, treasury, tax, audit, legal, information technology, human resources and risk management functions and the related benefit cost associated with such functions, including stock-based compensation. These expenses have been allocated to the Company based on direct usage or benefit where specifically identifiable, with the remaining expenses allocated primarily on a pro rata basis using an applicable measure of revenues, headcount or other relevant measures.

For the complete press release, click here.

About The Aaron’s Company Inc.

Headquartered in Atlanta, The Aaron’s Company, Inc. (NYSE: AAN), is a leading, technology-enabled omnichannel provider of lease-purchase solutions. The Aaron’s Company engages in the sales and lease ownership and specialty retailing of furniture, appliances, consumer electronics and accessories through its approximately 1,300 Company-operated and franchised stores in 47 states and Canada, as well as its e-commerce platform, Aarons.com. For more information, visit investor.aarons.com and Aarons.com.

Source: The Aaron’s Company, Inc.